POGO's Letter to Congress With A Dozen Nonpartisan Good Government Fixes To Implement in 2010

The Project On Government Oversight (POGO) is submitting to Congress a number of actions it should take that would fix many of the systemic problems that have long plagued the federal government and that spurred POGO's creation 29 years ago. POGO submitted a similar list to Congress in 2007, and is pleased to report that Congress made progress addressing several of the issues we raised. For example, Congress has passed legislation to create a database that addresses federal contractor misconduct and established the Senate Ad Hoc Subcommittee on Contracting Oversight and the Commission on Wartime Contracting in Iraq and Afghanistan that are trying to fix the broken federal contracting system.

But Congress has not adequately addressed many of the important issues we outlined three years ago. Despite the tireless efforts of a bipartisan group of Members, Congress has not passed the Whistleblower Protection Enhancement Act. Nor has Congress reoriented its defense spending priorities to the troops and national security mission rather than defense contractors, as evidenced by the numerous earmarks in the most recent defense appropriations bill, including $2.25 billion for the C-17 Globemaster airlifters the Department of Defense doesn't want. And because of such emergent problems as the financial crisis and the H1NI scare, additional issues have arisen that demand Congress's immediate attention.

The following are issues we believe Congress should address promptly:

1. Pass Whistleblower Protection Law

Frequently the first people to discover corruption and misconduct are federal employees. By seeking to fix the problems they uncover, these employees play a vital role in making sure the government is accountable and effective. Unfortunately, whistleblowers are almost always reprimanded, fired, and/or harassed instead of fêted, even if they have not "gone public" and even after their allegations are proven to be true. The federal Whistleblower Protection Act of 1989 is grossly inadequate in protecting federal workers and government contractors who expose waste, fraud, and abuse from retaliation by their supervisors. Until federal employees can expose wrongdoing without fear of retaliation, they will lack the incentive to report wrongdoing.

Auditors are on the front lines of rooting out wasteful spending in federal agencies. Experience has shown that increased funding for auditors ultimately results in greater savings for taxpayers, making it essential for these offices to have the funding, independence, staffing, and other resources they need to do their job. Unfortunately, investigations into the General Services Administration (GSA), Minerals Management Service (MMS) at the Department of the Interior, and the Defense Contract Audit Agency (DCAA) have found that auditors lack the independence from their agencies they need to effectively do their jobs. As a result, auditors' findings have been ignored or altered, and in some cases have resulted in retaliation or demotion.

Congress should consider establishing an independent federal contract audit agency. Until then, we hope that Congress provides rigorous oversight to ensure that agency heads allow auditors to operate independently, and warn them that officials who interfere with auditors' independence will be held accountable.

3. Improve Economic Recovery Efforts

Congress has committed $700 billion to the Treasury Department's Troubled Asset Relief Program (TARP) in response to the subprime mortgage crisis and the ensuing freeze in the nation's credit markets. Additional entities such as the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) are also lending and guaranteeing trillions of dollars in public funds to encourage lending and to assist banks in dealing with mortgage-backed loans and securities. To ensure the success of these commitments, Congress must take additional action:

Pass S. 910, sponsored by Senator Mark Warner (D-VA), amending the Emergency Economic Stabilization Act that adds greater transparency to TARP by creating a centralized electronic database with real-time updates on the expenditure of funds. This bill is the companion to one sponsored by Rep. Carolyn Maloney (D-NY) and Rep. Peter King (R-NY) that has already passed the House. The database would integrate information from both public and private sources, including regulatory filings, internal models, financial models, and analytics associated with the financial assistance received under TARP.

Close any loopholes in the financial regulatory reform legislation that would allow some companies to continue trading in over-the-counter (OTC) derivatives outside of well-regulated exchanges and clearinghouses. Otherwise, Congress should explain to the public why unregulated OTC derivatives trading is good for the economy, especially since the taxpayer-funded AIG bailout was caused in part by that company's exposure to its OTC derivatives contracts.

Demand that the Federal Reserve and Treasury take a more proactive role in protecting the government from the conflicts of interest that are likely to arise from its use of private fund managers for asset management and valuation in the government's bailout programs.

4. Put the Teeth Back in Financial Regulatory Agencies

In recent months there has been widespread bipartisan agreement about the need to strengthen the nation's financial regulatory agencies in order to prevent future economic crises. In particular, the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) have been failing in their missions to protect investors from securities fraud.

Congress should reevaluate the government's reliance on FINRA and other financial self-regulatory organizations (SROs) as frontline overseers of financial products. FINRA's claim that self-regulation saves taxpayers money is belied by the fact that taxpayers still have to pay for the SEC to conduct regular oversight of SROs. FINRA's recent failure to detect the Bernie Madoff and Allen Stanford Ponzi schemes should call into serious question whether self-regulators are deserving of any new regulatory authority.

Congress should also instruct the SEC to fully implement the hundreds of unimplemented recommendations made by the Inspector General (IG) over the past two years, which would help address many of the long-standing systemic problems that have hindered the agency's effectiveness as a regulator.

5. Uncover the Hidden Costs of Privatizing Government

Under previous administrations, vast swaths of the federal government have been shifted into the private sector in an effort to reduce the size of the federal government. From 2000 to 2008, the amount of federal money spent on contracting increased by over 150 percent—the majority of which is money spent on service contracts. The great promise that privatizing government would save money by engaging a more "efficient" private sector hasn't materialized. In fact, overzealous outsourcing created numerous concerns about whether the federal government can adequately control its spending and fulfill its mission. Contractors are now protecting embassies in war zones, participating in covert intelligence operations, and creating budgets, public policy, and government programs that are integral to government missions.

Reversing the trend of outsourcing of government jobs became a hot issue in 2009. Congress should closely examine the dramatic increase in the government's use of service contracts and the resultant weakening of agencies' ability to accomplish their missions and the taxpayers' ability to hold these agencies accountable. To better track the work of the federal government, Congress should require all federal agencies to account for the number of contractor employees working for the government using a process similar to FAIR Act inventories of government employees filed by federal agencies.

6. Ensure Taxpayers Get Their Fair Share of Revenues from Royalty Collection

Congress needs to pass legislation that ends the Royalty-In-Kind (RIK) program. Royalties on oil and gas from our nation's public lands is one of the largest sources of government revenue. Evidence from the Government Accountability Office (GAO) and the Interior Inspector General (IG) suggests that the RIK program is an "honor system" that likely results in significant royalty underpayments by the oil and gas industry. In order to ensure that taxpayers are getting their fair share of income from the country's natural resources, Congress must pass legislation to make Interior Secretary Ken Salazar's administrative decision to end the RIK program permanent.

7. Increase Government Accountability and Transparency

The press and the public may play the most important oversight role in holding the government and its contractors accountable. However, the tools the press and public need—such as databases being created to track information about past instances of misconduct by federal government contractors and to track the revolving door between the Pentagon and industry—cannot be accessed by the public. Congress should pass legislation to make both of these databases publicly accessible.

USAspending.gov should become the one-stop shop for government officials and the public for all spending information. This includes actual copies of each contract, delivery or task order, modification, amendment, other transaction agreement, grant, and lease. Additionally, proposals, solicitations, award decisions and justifications (including all documents related to contracts awarded with less than full and open competition and single-bid contract awards), audits, performance and responsibility data, and other related government reports should be incorporated into USAspending.gov.

Congress should ensure that basic information about how the federal government functions be made public, such as a list of how to contact employees concerning specific matters at each agency. Each agency should post a calendar for meetings of top-level officials. Similarly, visitor logs from executive branch policy meetings with lobbyists and outside groups should be made publicly available at least every three months, taking into account the need for exemptions for privacy issues.

The public should have online access to a list of all FOIA requests, which includes links to any documents released as a result of a request. Similarly, unclassified versions of all IG reports should become publicly available.

Congress should also ensure that all communications between agencies and Congress are publicly available, such as responses to inquiries and reports mandated by Congress.

In the face of the Obama Administration's Open Government Directive, which mandates increased public access to agency information, Congress should similarly open its doors. One important step would be for Congress to make conference reports and marked-up bills publicly available at least 72 hours prior to the vote.

Additionally, Congress should mark up and pass Senate Resolution 118, which would allow Senators to officially provide public internet access to all non-classified Congressional Research Service (CRS) products, some of the best research conducted by the federal government.

8. End Wasteful Defense Spending

The Pentagon has begun to demonstrate an increased willingness to balance priorities around realistic threats and instill discipline in weapons acquisitions. Unfortunately, Congress continues to fill the Defense Appropriations bill with pet projects and earmarks for programs the Department of Defense (DoD) neither wants nor needs, such as the C-17. These earmarks divert money away from more urgent national security priorities. Congress should make sure that Defense Appropriations bills reflect spending based solely upon national security needs instead of parochial interests.

Congress must also make sure that the Pentagon truly is committed to responsible acquisitions. The Pentagon often issues waivers to key program milestones and requirements because Congress rarely, if ever, holds them accountable for failing to follow their own rules. Congress should use its oversight and appropriations authority to make sure the DoD does not allow weapons system programs to ramp up production until after the weapon technology is proven through independent Operational Test and Evaluation.

9. Make Government Watchdog Organizations More Accountable

Inspectors General require an extraordinary degree of independence to effectively perform their duties. But they also need to be held accountable for misconduct and inadequate work performance. In some cases such accountability will necessitate that an IG be removed from his or her post. As demonstrated by recent events, the process of removing an IG can create a considerable chilling effect on the entire Inspector General community when the justification for that removal is not fully transparent.

To ensure that the entire IG community has trust that presidential decisions to remove IGs are motivated by legitimate causes rather than retaliation or politics, Congress should amend the Inspector General Reform Act of 2008 to include a provision that would allow the President to remove an Inspector General only for cause. The provision should also require that the President inform Congress in writing of the full justification for the decision.

10. Drag the Nuclear Complex Out of the Cold War, and Ensure Oversight of Lab Contractors

The people who are running the nuclear weapons complex at the Department of Energy (DOE) operate as though the Cold War is not over. Congress should prioritize efforts to secure vulnerable fissile material around the world and in the U.S., instead of letting the Administration pour billions of dollars into expanding nuclear bomb-making materials, weapons, and facilities spread across the country. For example, the Administration is continuing to store approximately 250 metric tons of highly-enriched uranium (HEU) in World War II-era buildings, creating a security risk and requiring billions of dollars for the construction of new facilities and millions of dollars for security.

Congress should push DOE to declare as excess and downblend the growing stocks of HEU into low-enriched uranium which, unlike HEU, poses no security risk. Furthermore, LEU can be sold as fuel for nuclear power reactors, generating at least $26 billion in new revenues for the government. In addition, Congress should look into why DOE has been dragging its feet in dismantling the thousands of warheads that have already been declared excess, and are in queue at both Pantex and the Y-12 National Security complex. Inexplicably, the 2011 budget for this effort has been cut in half. This funding shortfall both increases security vulnerabilities and creates unnecessary costs that could otherwise have been converted to revenue.

Additionally, Congress should conduct oversight of DOE's shift towards a policy of self-policing for the contractors who manage the eight facilities that comprise the nuclear weapons complex.

11. Disclose Conflicts of Interest in Scientific Research

One issue that POGO included in its 2007 Baker's Dozen list to Congress has only partly been addressed. A few years ago, press reports revealed that a number of researchers at the National Institutes of Health's (NIH) central facility in Bethesda also served as paid consultants to drug and biotech companies while they were working for the federal government. The serious conflicts of interest these situations caused were resolved by simply abolishing all paid consulting and other types of payments to NIH's intramural scientists by private companies. However, many researchers at the nation's medical schools and universities who receive NIH grants and contracts continue to consult for private companies.

Congress should ensure that the NIH require its grantees to publicly disclose their paid arrangements with pharmaceutical companies, as well as their ownership of relevant stock and stock options, as a condition of having their medical research funded by the government.

Furthermore, the public would also benefit from greater transparency in the Department of Health and Human Service's programs, particularly for vaccine production in a pandemic. The online posting of all government contracts for vaccine production would be a good place to start. We urge Congress to press for easy public accessibility to this information.

12. And of Course: Fix the Broken Federal Contracting System

Since 1981, POGO has exposed numerous problems that are the result of so-called procurement or acquisition "reforms," including cozy negotiations, inadequate competition, lack of accountability, little transparency, and risky contracting vehicles that are prone to waste, fraud, and abuse. While there have been some fixes to the federal government's contracting systems, there are many more that must be implemented.

Increase the scope of civil, criminal, and administrative cases included in the federal contractor responsibility and performance database. Cases should include civil, criminal, and administrative proceedings resulting in the payment of a monetary fine, penalty, reimbursement, restitution, damages, or settlement of $5,000 or more to a government—even when there is no admission of guilt or liability, and even when it isn't related to a contract or grant.

Require contractors to provide cost or pricing data to the government for all contracts, except those where the actual goods or services being provided are sold in substantial quantities in the commercial marketplace.

Require that all administrative agreements are shared among agencies and are made publicly available.

Reverse the philosophy of quantity over quality in getting contracts out the door. Acquisition is now about speed, and competition is considered a burden, which is a recipe for waste, fraud, and abuse.

Debundle contract requirements to invite more contractors to the table. Contracts that lump together multiple goods and services exclude smaller businesses that could successfully provide one good or service, but are incapable of managing massive multi-part contracts. Breaking apart multi-supply or multi-service contracts would also assist the government in reducing the multiple layers of subcontracting now prevalent in federal contracting that can drive up costs while adding little value.

Ensure that waivers of competition requirements are granted infrequently—namely, the requirements for task and delivery orders issued under multiple-award contracts or the federal supply schedule program.

Increase emphasis on sealed bidding to achieve the lowest prices.

Use reverse auctions more frequently when purchasing goods. Counter to an auction where the price increases with each bid, the government should conduct auctions where the contractors bid decreases with each offer. In a DOE reverse auction for pagers, two companies submitted initial bids for $43 and $51 per pager. At the close of bidding, the government awarded the contract at the low price of $38 per pager.

Appropriate money to agencies to end their reliance on the industrial funding fees collected from other agencies for orders placed on interagency contracts. Currently, agencies procuring goods and services for another agency receive a percentage of the purchase price, and therefore might not be seeking best prices given that lower prices result in lower fees received by the procuring agency. This fee system creates a perverse incentive to keep costs or prices high.

The Truth in Negotiations Act (TINA) should be substantially revised to restore the common-sense requirements that were in place prior to the "acquisition reform" era. Specifically, all contract awards over $500,000, except those where the goods or services are sold in substantial quantities to the general public in the commercial marketplace, should be subject to TINA. This small step would result in enormous improvements in contract pricing, negotiation, and accountability, and save taxpayers billions of dollars per year.

All contracting opportunities in excess of $100,000—including task or delivery orders, and regardless of whether the action is subject to full and open competition, awarded against a GSA Federal Supply Schedule or an agency Government Wide Acquisition Contract, or any other type of contracting vehicle—should be required to be publicly announced for a reasonable period prior to award, unless public exigency or national security considerations dictate otherwise.

All contracting actions, including task and delivery orders, should be subject to the contract bid protest process at the Government Accountability Office (GAO). While many will decry this recommendation as adding "red tape" to the process, it is the only meaningful way to ensure that contractors are treated on an even playing field, and that agency contract award decisions can be justified in a way that will instill public confidence.

None of these issues are partisan. In fact, the solution to many of these problems involve strengthening the watchdogs in the government, a goal that should be shared by both sides of the aisle.

These issues also provide an opportunity for Members of Congress and the President to work together to sign into law good government bills that prevent waste, fraud, and abuse. Passing those laws and actually conducting real oversight would be a substantive response to taxpayers’ concerns that the government does not spend their money sensibly. Swift implementation of comprehensive government oversight will reap benefits for taxpayers long past the election cycle.

Founded in 1981, the Project On Government Oversight is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.